Investment in new hydrogen electrolyser factories is being hindered by sluggish policy roll-outs and uncertain demand: IEA - Hydrogen Insight

Investment in new hydrogen electrolyser factories is being hindered by sluggish policy roll-outs and uncertain demand: IEA | Recharge

Investment in new hydrogen electrolyser factories is being hindered by sluggish policy roll-outs and uncertain demand: IEA

Global electrolyser manufacturing capacity could hit 170GW by 2030 — but only 13% is committed today, the agency says in a new report

Global manufacturing capacity of green hydrogen electrolysers could hit 170GW by 2030 — representing a significant jump in announced capacity since 2022 and enough to put the world on the pathway to net zero by 2050, according to new analysis from the International Energy Agency (IEA) published yesterday (Tuesday).

Stay ahead on hydrogen with our free newsletter

Advancing Clean Technology Manufacturing, only a fraction of this capacity is actually committed or under construction and, in fact, the growth of the entire electrolyser manufacturing sector hangs in the balance in the face of continued uncertainty over green hydrogen demand.

The 170GW figure, which comprises existing capacity as well as cumulative announcements made up to the end of 2023, represents a 66% increase on the 102GW of 2030 capacity that the IEA collated at the end of 2022.

With existing electrolyser manufacturing capacity sitting at around 23GW — nearly double the 12GW capacity of 2022 — this implies an electrolyser factory pipeline of 147GW.

If realised, the 147GW expansion would deliver just enough electrolysers for the green hydrogen projects needed to put the world on a trajectory to net zero by 2050, the IEA calculates.

But only 13% of this figure — around 19GW — relates to factories that are either under construction or have reached final investment decision (FID), the IEA notes, meaning that 87% of the planned output is in the early stages of planning.

And more than 40% (48GW) of the figure relates to projects that have not yet specified a target year.

The IEA notes that 13% of electrolyser manufacturing that has passed FID is an improvement on the previous year (in which it was 7%), but warned that the pipeline is highly sensitive to a range of uncertainties relating both to green hydrogen developments and electrolyser supply chains.

In addition, many factories in the pipeline, including those that have reached FID, are electrolyser assembly facilities that will rely on the available supply of components such as membranes, cathodes, anodes, bipolar plates, power electronics.

These factories are competing with more mature industries such as battery producers for these components, says the IEA.

“Reaching the capacity expansion envisaged by announced projects will depend on the scale-up of manufacturing capacity of all these components in parallel, to prevent bottlenecks occurring in certain parts of the supply chain,” the agency says, adding that there is no visibility on whether manufacturing capability will be expanded to meet the demands of all sectors.

In addition, the IEA warns that its estimates for existing capacity relate to the nominal capacity of factories rather than actual capability, which is often significantly lower for several years from commissioning as assembly lines are usually not ramped up to full capacity until necessitated by demand.

This means that not only is the pipeline of projects very uncertain, but existing capacity is also unlikely to be fully utilised in the immediate future.

Chinese manufacturers, which boast nominal electrolyser manufacturing capacity of 13GW today and make up around a third of the expected 2030 capacity, can be expected to exceed China’s demand for electrolysis equipment and can look to export.
(Copyright)